Strong demand drives auto sales

TUPELO – Scooter Carr has a problem on his hands, as does a host of automobile dealers across Northeast Mississippi.
Demand for new vehicles is outpacing the supply, they say.
“We can’t get enough to satisfy what our needs have been,” said Carr, who heads the House of Honda at Dossett Big Four.
Said Dwayne Blackmon, whose namesake Chevrolet dealership has also seen a surge in sales, “Cars are selling really well, like the Cruze and Sonic. They’re good-mileage cars, but we’re also still selling many trucks.”
And with gas prices easing back down after their quick ramp-up earlier this year, more shoppers are not only kicking the tires, they’re buying them.
For Carr, the Accord sedan and Odyssey minivans are two vehicles that he can’t get enough of. The rest of the Honda lineup, including the popular Civic, also is selling well. While the dealer’s lot hasn’t been empty, it hasn’t been anywhere close to full.
“We normally have 80 to 100 vehicles on site, but we’re staying right around 25 to 40,” he said.
Some would say that’s a good problem to have, especially for an industry still recovering from the recession.
After U.S. auto sales reached nearly 17.5 million in 2005, the bottom fell out as the economy faltered. By 2009, sales plummeted to 10.4 million – a 41 percent drop. It was the weakest showing in 27 years.
GM and Chrysler filed for bankruptcy protection, closed plants, laid off workers and shuttered hundreds of dealerships. No automaker escaped unscathed.
Now, the industry appears to be on much firmer ground.
GM and Chrysler have emerged leaner and stronger, with sales to show for it. Along with its other traditional Detroit Three automaker, Ford, the companies have reopened plants, added employees and worked them overtime.
According to an IHS Automotive report from early last week, sales this year could reach 14.3 million. On Thursday, J.D. Power and LMC Automotive predicted 14.5 million. The figures still are not up to 2005, but they are more than a third better than three years ago.
“There is little question that this market currently has momentum, but it also is benefiting from the stability in the economic and macro fundamentals required to sustain a higher selling rate throughout the remainder of the year,” said LMC analyst Jeff Schuster.
In other words, business is looking good.
Gary Cartwright’s Ford dealership in Booneville can attest to that. Sales of popular vehicles including the Fusion, Fit and Focus, along with perennial best-selling F-series truck, have Cartwright ecstatic.
“Sales are up, the economy is better and gas prices are down,” he said.
The tax refund season provided a big boost in new-vehicle buyers, he said.
“That’s a lot of money that can be used for a down payment, and they were doing that,” he said.
While business is brisk, Cartwright isn’t quite ready to say the auto industry has made a full recovery.
“We’re still a long way from what it was before the recession, but it’s definitely better,” he said.
Hoyt Sheffield agrees.
The longtime auto dealer and owner of Tupelo Auto Sales, which sells Chrysler, Dodge and Jeep, said business has been brisk across the country at Chrysler dealerships.
“Every product is selling well,” he said.
And like Carr, he can’t get enough of certain vehicles to meet demand.
“Jeep Wranglers and Grand Cherokees, and to some extent Dodge Chargers – the supply just isn’t there,” he said.
Other import dealers like Carlock Toyota and Barnes Crossing Hyundai have enjoyed record sales lately as well. They, too, are finding it harder to get their hands on popular vehicles.
“We’re up over last year and last month was the busiest month we’ve ever had,” said Carlock General Manager Mike McLellan. “This month is shaping up to be very good, too.”
The redesigned Camry sedan has been selling very well, as has the Corolla – which is being built at the nearby Toyota plant in Blue Springs.
Joe Marshall’s sales at Barnes Crossing Hyundai have been so strong he’s had to lease off-site space to keep enough cars like the Sonata in stock.
“The new-car business has been strong compared to the last four years and those historically low numbers,” he said. “Because of that, there’s been a demand for new cars. Really strong.”
Another driver for higher new-vehicle sales is the high demand for pre-owned cars. That demand skyrocketed in recent years as consumers went shopping for bargains. That drove up prices. And now that the gap between new and used prices has narrowed, dealers say many consumers are opting for new.
“People are comparing the differences between new and used, see that gap has closed and they’re going for new,” Marshall said.
dennis.seid@journalinc.com